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RoboBusiness: Workhorse Robots, Starter Kits, and Internet of Bots

Mon, 10/20/2014 - 07:00
Martin LaMonica

Roboticists who attend business conferences don’t always have kind words for humanoid robots. It’s not that walking, talking androids aren’t cool, particularly if one could take the trash out for you. But entrepreneurs and investors in robotics are looking for something far more practical—and profitable—in the near term.

Commercial viability and pragmatism was one of the themes at last week’s RoboBusiness conference in Boston. The company that won the startup pitch competition was nLink, a Norwegian company that makes a machine to measure and drill holes in ceilings for construction workers. Rather than tout the crane-mounted machine’s autonomous robot features, founder Konrad Fangertun focused on the end result and its business model—“drilling holes into concrete ceilings as a service.”

During his keynote talk, iRobot CEO Colin Angle poked some fun at his own work from his student days at MIT, saying that building a legged robot to walk up stairs is a waste of time. IRobot sells stair-climbing robots to the military that use tracks and flippers and are far more effective at the task. Similarly, making hand-like grippers with four or five digits often isn’t necessary when simpler and cheaper grippers can be just as effective. “The goal isn’t to create a replica of a person; it’s to solve a problem,” Angle said.

Indeed, a walk around the conference floor showed that robots come in many different shapes—from tank-like machines with tracks, to robotic arms, to something that looks like a moving file cabinet. There were humanoid robots as well, but they used for research or very specialized needs, such as operating on the International Space Station.

A few other themes I picked up on during my visit:

Collaborative robots. Historically, robots have been industrial machines on the factory floor that were kept away from people for safety reasons. But that’s been changing as designers build robots to work alongside people.

That’s very much the point of Baxter, the manufacturing robot made by Rethink Robotics, which can be taught to perform a task by having a person move its arms. But the notion of having robots and humans working side by side is happening throughout the industry.

North Billerica, MA-based Harvest Automation, for example, sells a small robot designed to move potted plants around greenhouses and nurseries and is now working on a robot to fetch goods in warehouses that fulfill e-commerce orders, CEO John Kawola told me. The company envisions that a warehouse worker would walk and put requested items in a milk crate-size bin placed on a lower shelf. Later, the robot, which only comes up to about the knee, would drive up and collect bins when they’re filled.

Kiva Systems already makes robots for e-commerce warehouses, but since being acquired by Amazon two years ago, it’s focusing its efforts on Amazon facilities. “It’s created an opportunity in the market,” Kawola said. “And the e-commerce side of warehouses is exploding.”

Similarly, Vecna’s QC Bot is designed to work with nurses to deliver materials, such as medications and meals, in hospitals. It can also be used for telepresence. (In a sign of how important robotics is to healthcare, Vecna plans to host a robotics incubator at its offices in Cambridge as part of a MassRobotics initiative.)

The soft(ware) side of robotics. Robotics companies already borrow heavily from other industries for their components, such as sensors and wireless chips used in mobile phones. Similarly, robots can get relatively cheap gesture recognition capabilities from off-the-shelf devices, such as Microsoft’s Kinect console, or integrate tablets, as Double Robotics has done with its telepresence robot. Going forward, iRobot’s Angle thinks a few critical software technologies are maturing, including artificial intelligence and indoor navigation.

Traditionally indoor navigation, which is essential for robots to know their surroundings, is done with simultaneous localization and mapping (SLAM) technology. Using lasers, it scans an area to build a map for the robot but it’s expensive, Angle said. Now, some imaging companies are using cameras to build indoor maps to help architecture firms create visual representations of their work, for instance.

“The next revolution coming is visual SLAM using low-cost cameras,” he said. “It effectively builds usable maps for tens of dollars as opposed to hundreds of thousands of dollars. This is a technology that companies that make mobile robots will want to embrace.”

What about software tools for building new robots? I also spoke to San Diego-based Brain Corporation, which has made a low-cost hardware and software kit for robot developers; it plans to release the beta product early next year. Central to the kit is software that allows for rapid programming by showing the robot the motion the user wants to do using a remote control; the robot then mimics those motions.

For example, a person could show a mobile robot how to pick up toys and put them in a bin. “We think there will be a lot more sophisticated applications once the kinds of technologies we’re working on become broadly available. It shouldn’t be that hard to do,” said Todd Hylton, the company’s senior vice president of strategy.

The Internet of Robots. How do the Internet of things and robotics fit together? It’s early days, but people I spoke with said that the two technology trends reinforce each other. A smart thermostat, for example, could benefit from geo-tagged data gathered by a robot, or a home healthcare robot could get imagery to monitor how an elderly person is doing at home instead of relying on a fixed camera, says Angle.

Also, robots can benefit from sensors and wireless communications in buildings and other environments, says Dan Kara, an analyst at ABI Research. “What you have is an edge device that highly mobile and highly sensored that’s operating in an environment that’s highly sensored itself. And you have some local computing” with the robot, Kara said.

Most of all, one gets the feeling that robotics is attracting more entrepreneurs and investors, sometimes from other fields of technology. As a high-tech field, research and development remains integral to commercial robots. But the people who can meet a market need are the ones who will get robots out of the lab and into more mainstream use.

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Shanghai Report: Big Questions About China’s Growth Plans

Mon, 10/20/2014 - 06:00
Michael A. Greeley

It only took a few days after I returned from China for my eyes to stop burning, and maybe the slight cough was really due to the changing seasons in Boston and not the air pollution in Shanghai (now I better understand the amenity in my hotel room—see below). A small price to pay to witness the extraordinary commercial activity in what may well be the largest economy in the world sometime in the next decade. And what a fascinating time to be there—although each time I go back I may be at risk of thinking it will be the most fascinating time to be there.

Arguably the recently introduced reforms by Premier Li Keqiang have ushered in dramatic economic and political advancement. China has never appeared so confident, so assertive. Since late 2012 the systematic purging of corrupt corporate and government officials, undertaken to bolster the public’s confidence in the Communist Party, has led to some spectacular falls from grace. One hopes that increased economic freedoms might gradually lead to greater political freedoms (although as seen in Hong Kong these past few weeks, that does not yet appear to be the case—the October 10 China Daily editorial was titled “HK Protesters Have No Valid Grievances”). Ironically, the intense focus on rooting out corruption may also be contributing to slowing economic growth, as Premier Li is dependent on those same government bureaucrats to implement his economic agenda—and many are undoubtedly quite distracted (worried) now.

Having grown up in Hong Kong, I have been fascinated for many years by the dramatic ascendancy of China; in my lifetime nearly 25 percent of the world’s population will have “come of age”—perhaps capped off with the IPO of Alibaba last month, now one of the largest internet companies in the world. But this economic engine requires significant growth and worrying signs are now quite evident. While the official GDP growth rate target for 2014 is 7.5 percent (analysts worry that growth below 7 percent will cause reforms to stall out), the Chinese Academy of Social Sciences announced last week that it forecasts growth to be 7.3 percent this year. Storm clouds are building. Other data points—some of which were reported in the China Daily newspaper last week.

  • Two of the four largest commercial banks in China cut rates to spur mortgage lending. It is quite clear that China has a real estate “issue”—through August 2014 home sales this year dropped 11 percent. And real estate is estimated to be about 25 percent of the Chinese economy.
  • Related news: the Central Bank of China cut reserve rates for the second time in the last 30 days to 3.4 percent to spur borrowing.
  • China experienced the greatest monthly steel export boom last month (up 73 percent year-over-year) due to soft local demand and perhaps indicating that Chinese steel is being dumped onto the global market—watch for a US protectionist backlash.
  • Car sales in China rose at the slowest monthly pace in September over the past 19 months, increasing 2.5 percent, down from about 20 percent last year.

While I was there, Barclays Research issued an analysis of state-owned companies which underscored the depth of the economic exposure the Communist Party is confronting. More than 25 percent of state-owned companies lost money in 2013 (as compared to 10 percent of private companies); the return on equity was calculated to be less than 5 percent for state-owned enterprises (vs. 14 percent for private). Just to complete the thought, return on assets—also 5 percent for state-owned as opposed to 9 percent for private companies. Clearly there is a significant amount of “unproductive” capital still tied up in the Chinese economy, which has led to a dramatic decline in listed equities for state-owned companies in the last 30 days (often times declines of greater than 20 percent).

So what I find so fascinating is watching the Chinese government manage this colossus to a more private capitalist system. This will be one of the greatest transference of asset ownership from collective to private status in the history of mankind—perhaps a little grandiose but the point still stands. Just this past week alone there were a series of developments which underscore this rapid pace of change—easy to dismiss any one of them, but when viewed collectively a clear pattern emerges.

  • The 2014 Report on Foreign Investment in China, issued by the University of International Business and Economics in Beijing (20 years ago it would have been hard to imagine that such an entity would even exist) determined that there was $118 billion of foreign direct investment in 2013 in country, of which $62 billion was in the services sector (up 14 percent year-over-year). There is a clear rotation away from manufacturing investment by foreigners in China.
  • German Chancellor Merkel welcomed Premier Li in Berlin last week and announced 110 new cooperation and investment agreements aggregating to $18 billion in value. In the midst of all that fanfare, four leading German “economic institutes” announced that German GDP would grow 1.2 percent in 2015—which is awkward when your guest is nervous about 7.3 percent.
  • After Germany, Premier Li spent three days in Russia signing only 40 agreements. Obviously Russia is anxiously tilting toward China as the rest of the world shuns the Kremlin—which further bolsters China’s role as a Super Power.
  • The Chinese seem to be on a US “shopping spree”—the $2 billion acquisition of the Waldorf Hotel in New York City was announced last week. The Rhodium Group estimated that another $10 billion of acquisitions would be announced shortly.

And given my professional interest in healthcare, I focused intently on developments in that sector, which were everywhere last week.

  • It was announced in Beijing that foreign entities can now directly invest and operate joint venture hospitals in China, while Hong Kong- and Macau-based investors can own and operate hospitals outright in certain selected cities. This was confirmed with great excitement by senior hospital executives I met with while in Shanghai.
  • The local healthcare issues are significant. Cities outside of Beijing in northern China reported air quality levels 20 times worse than healthy levels. In Beijing on Saturday PM 2.5 pollution particles measured over 500 micrograms per cubic meter of air—that should really be closer to single digits.
  • It was World Mental Health Day (October 10) while I was there. The China Daily reported that the 6,910 mental health specialists in Beijing were overwhelmed treating the over 50,000 patients (didn’t strike me as all that bad until I read on…). The Chinese Center for Disease Control and Prevention estimated—wait for it—that there are over 100 million people in China with mental health “problems,” of which 16 million were classified as with “very worrying conditions.”
  • Ebola was referenced but seemed to be characterized as an “African issue” still (although admittedly that might be unfair just reading three days’ worth of local newspapers).
  • The China Daily reported that “Sexting Still Popular Activity in US Despite Risks”—so it is not just the Chinese that are confronting these serious health risks!

And lastly, this same newspaper, which was only 12 pages long, dedicated one entire page to covering the NBA, undoubtedly appealing to some of those people with mental health problems.

This post also appears on Michael Greeley’s blog On the Flying Bridge, and is published here with permission.

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Innovation Hub: Introverts as Innovators

Fri, 10/17/2014 - 15:11
Kara Miller

Entrepreneurs, bosses, and leaders are often highly social and extroverted—take Steve Jobs or Richard Branson. They can work a room. They derive energy from being around others.

But what if being outgoing and extroverted isn’t actually the key to success in the workplace? Susan Cain, author of Quiet: The Power of Introverts in a World That Can’t Stop Talking, believes that innovation and introversion go together better than you might think.

[This interview has been edited and condensed. For the full conversation, visit www.innovationhub.org]

Kara Miller: Many innovators you hear about are larger-than-life characters. Are there introverted people in the shadows who are also part of the innovation process?

Susan Cain: In some ways, you almost can’t find a great innovation process without finding shy people who are a part of it. For example, the first personal computer was invented not by Steve Jobs, but by his partner Steve Wozniak, a very shy, introverted guy. Often, in these origin stories, we tend not to focus much on the contributions of the people who, by their nature, don’t really want us to focus on them.

KM: Is there a danger when these “silent partners” don’t end up with a major role in the history books?

SC: The real downside is that, when it comes time to dream up the next innovation, we don’t think about creating teams and processes that include shy, quiet members, or that effectively draw on the talents of the people who want to go off by themselves to do their work. A lot of people get to do their best work when they go off by themselves.

KM: What does the research show about the benefits of brainstorming versus sitting alone and coming up with something by yourself?

SC: We tend to think that collaboration only means sitting in a group of people bouncing around ideas. Over forty years of research on brainstorming shows that individuals who brainstorm by themselves produce more and better ideas than groups of people who brainstorm together. Most people are working in gigantic open spaces, with no respite at all from listening to other people’s conversations. These spaces make people much less productive. They make people physically ill—literally. But it’s a lot less expensive to design an office with no walls.

KM: If you, on behalf of introverts, could give one piece of advice to the extroverts of the world, what would it be?

SC: There’s research that shows that introverted leaders deliver better outcomes than extroverts do when they’re managing proactive employees, because introverted leaders are better at listening, cultivating other people’s ideas, and letting those ideas fly, as opposed to putting their own stamp on things. That’s one example of a way that extroverts could learn from introverts.

Mikaela Lefrak contributed to this write-up.

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West Coast Biotech Roundup: Illumina, Atara, Invitae, Canaan & More

Fri, 10/17/2014 - 07:30
Alex Lash

From big venture firms to tiny genomics startups, we’ve got plenty to round up this week—beyond biotech, too, as the San Francisco Giants head east to the biggest baseball rodeo for the third time in five years, thanks to Seattle native Travis Ishikawa (pictured). Here’s the windup, and the pitch…

—Canaan Partners of Westport, CT, and Menlo Park, CA, closed its tenth general fund with $675 million in commitments, the ninth largest venture fund raised in 2014.

—Invitae, a San Francisco-based genetic testing company, raised $120 million in a Series F round of financing. The funds came from a long list of investors. New investors included Decheng Capital, Deerfield Management, OrbiMed, and Wellington Management, while existing investors coming back included Casdin Capital, Genesys Capital, Genomic Health, and Invitae CEO Randy Scott. Scott is the former CEO of Genomic Health.

—The National Institutes of Health awarded nearly $32 million to solve big data problems in genomics and other healthcare fields. The initial investment will establish big data “centers of excellence” at 11 research centers, including UCLA, The Scripps Research Institute in San Diego, Stanford University; UC Santa Cruz, and the University of Southern California.

—Atara Biotherapeutics of Brisbane, CA, raised $55 million in its public debut on NASDAQ Thursday after postponing its IPO try earlier this year.

—Immune Design (NASDAQ: IMDZ) of Seattle and Paris-based multinational drug firm Sanofi (NYSE: SNY) announced Thursday a joint development project for Herpes simplex virus (HSV) treatments. Both companies will contribute a vaccine candidate, and Sanofi will be responsible for Phase 3 development and commercialization.

—A surgical team at UC San Diego’s Sanford Stem Cell Clinical Center is ready to carry out the first human clinical trial of a stem cell-derived therapy for patients with type 1 diabetes. Doctors plan to implant embryonic stem cells engineered by ViaCyte of San Diego to grow into healthy pancreatic cells that produce insulin and related hormones.

—San Diego-based Illumina (NASDAQ: ILMN) revealed the first three companies admitted to its six-month accelerator program in San Francisco for genomics-related startups. The three companies—Encoded Genomics, Xcell Biosciences, and EpiBiome—get full access to Illumina’s next-generation gene sequencing systems.

—DNAtrix, a biotech based in San Diego and Houston that is modifying viruses to treat the most aggressive forms of cancer, said it has raised $20 million in a Series B round led by Shanghai-based Morningside Ventures. Existing investors, including the Houston-based Mercury Fund and San Antonio, TX-based Targeted Fund, joined in the round.

—The FDA gave its approval to pirfenidone (Esbriet) for the treatment of idiopathic pulmonary fibrosis. The drug is owned by Roche, which acquired it in late August when it bought Intermune of Brisbane, CA, for $8.3 billion. The FDA also approved another IPF drug, nintedanib (Ofev) from Boehringer Ingelheim.

—Shares of Aethlon Medical, a San Diego medical device company, closed at 24 cents a share yesterday, after leaping 9 cents (a 60 percent gain) in over-the-counter trading after the company said its experimental blood-filtration technology was used to treat an Ebola-infected patient in Germany.

—Seattle’s Kineta said Tuesday that it has launched a Phase 1b trial in psoriasis for its drug candidate ShK-186. It also plans to test the drug against psoriatic arthritis in the next few months.

– Xconomy San Diego editor Bruce Bigelow and Xconomy Seattle editor Ben Romano came in from the bullpen to contribute to this report.

 

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VC Funding Still Robust as Year-to-Date Total Exceeds 2013

Fri, 10/17/2014 - 01:01
Bruce V. Bigelow

Venture capital activity is down from a 13-year high during the second quarter, but a new MoneyTree Report released today shows that venture funding was still going strong in the three months that ended Sept. 30, with $9.9 billion invested in 1,023 deals.

That was almost a 27 percent drop from the $13.5 billion that VCs invested in the previous quarter, and a 9 percent decline in deals, according to MoneyTree data—reinforcing the early returns from CB Insights on third-quarter venture capital activity.

The MoneyTree Report, prepared by Pricewaterhouse Coopers and the National Venture Capital Association from data provided by Thomson Reuters, doesn’t always align with the quarterly survey from CB Insights. Another source of data on VC activity, Dow Jones VentureSource, reported that VCs invested $11 billion in 899 deals nationwide over the three months that ended Sept. 30—but also showed that was a decline from a surge in the previous quarter.

The absolute numbers vary because of different criteria that each group uses to count venture deals, investment tranches, and types of deals. There even are significant differences between VentureSource and MoneyTree in listing the biggest venture deals each quarter. (Our list of MoneyTree’s Top 10 Deals is below.)

Nevertheless, all three sources show that venture funding is running at a higher rate in 2014 than it has in years. According to the MoneyTree Report, venture firms have invested more than $33 billion in U.S. startups through the first three quarters of 2014—already surpassing the $29.8 billion total that VCs invested in all of 2013.

Software continues to get more venture funding than any other sector, with VCs investing $3.7 billion in 418 deals in the third quarter, according to the MoneyTree Report. While that was down from the previous quarter, Internet-specific investments remained steady, as VCs invested almost $3.2 billion in 248 deals during the quarter.

Assuming venture investments of $9 billion or so in the fourth quarter, the total for 2014 should come in around $42 billion. That would be almost 41 percent more than last year’s total, and about 61 percent higher that the $26 billion average total over the previous five years.

The number of deals, however, is running at … Next Page »

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Canaan Closes $675M Fund, One Of Venture’s Ten Largest This Year

Thu, 10/16/2014 - 15:07
Alex Lash

In a year of big venture capital numbers, Canaan Partners has provided one of the biggest. The Westport, CT-based firm announced Thursday a $675 million fund, its tenth.

As with its previous general funds, Canaan, which also has a main office in Silicon Valley, will put the money into both tech and life sciences. Both sectors have provided ample exits for the firm in the past twelve months. Canaan counts twelve total, including biopharma firms Labrys Biologics and Civitas Therapeutics, and on the tech side, Skybox Imaging and Metacloud.

According to the National Venture Capital Association, Canaan X is the ninth largest fund raised in 2014, and the only one in the top ten with a large biotech commitment. It also arrives less than three years after the firm closed its ninth fund with $600 million in commitments.

The recent success is in part a result of a strategy shift about a decade ago, says general partner Wende Hutton (pictured). “Since 2005 we’ve had a focus on early stage and seed stage companies, we’re talking handcrafted deals, small amounts to take early companies forward into their first institutional rounds,” she said. “That is something different from prior generations of Canaan, and many of our lucrative returns have been early-stage successes.”

That doesn’t always mean taking huge technological risks, however. On the biotech side, two of the big “early stage” wins for Canaan were built around relatively advanced products that had stalled out at bigger companies. “We do look for opportunities where we can take forward clinical assets with a lot of data or intellectual property in back of them,” said Hutton.

One was Labrys, which Canaan and Series A syndicate partner venBio formed around a treatment for migraine that they licensed from Pfizer in late 2011. Another was San Diego’s Advanced BioHealing, which Shire bought for $750 million in 2011. ABH was based on Dermagraft, a commercial wound healing product that Smith & Nephew was no longer interested in carrying. (That deal ended up as a boondoggle for Shire, which sold its regenerative medicine business in 2014 and wrote off Dermagraft as a $650 million loss.)

On the tech side, general partner Dan Ciporin, one of the firm’s tech investors based in New York, said areas ripe for disruption are the financial sector, where Ciporin led the firm’s investment in LendingClub; marketplaces like ridesharing and real estate; and storage technology.

The tenth fund will follow the previous rule of thumb for the firm: two-thirds allocated to tech, one-third to health care. The firm will also pursue the growing field of digital health, which incorporates elements of both sectors. When asked which pot of money the digital health funds will come from, Ciporin said it would generally hinge upon which partner is leading the deal.

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Illumina Admits First Startup Accelerator Class

Wed, 10/15/2014 - 16:47
Alex Lash

Bioinformatics giant Illumina (NASDAQ: ILMN) is getting into the accelerator game, along with other players in the life sciences and other fields. On Wednesday it announced the first three startups chosen to start the program this fall at its San Francisco lab space.

San Diego-based Illumina, which makes genomic analysis systems, unveiled the program in February, joining the growing list of academic institutions, venture-backed groups, and life science corporations building start-up space in the Bay Area and beyond. Not least among the benefits of the Illumina accelerator program is access to the company’s high-end gene sequencing systems, which are installed  in the lab space Illumina has leased near the Mission Bay campus of the University of California, San Francisco.

The accelerator’s terms are similar to those offered at other programs of its kind: The young companies will receive seed investments in exchange for an equity stake, as well as business advice from expert mentors. Illumina’s partners in nurturing the growth of the startups are billionaire Russian investor Yuri Milner and Silicon Valley Bank.

The first three companies in the six-month Illumina program are Encoded Genomics, Xcell Biosciences, and EpiBiome.

Both Xcell and Encoded are currently residents of other startup programs. Xcell, which is working on a new way to find rare cancer cells in blood samples and grow the cell population to facilitate testing, is in Bayer Healthcare’s CoLaborator, which houses seven startups in Mission Bay. Encoded, which has kept details of its genomics-related work more guarded, occupies space at QB3@953, a San Francisco incubator jointly run by Johnson & Johnson’s Janssen Labs and QB3, a University of California-affiliated group.

EpiBiome jumped the gun and announced its selection for the Illumina program in September. Its initial goal is to develop anti-infective treatments for cows.

The list of other players that run or support Bay area incubators or accelerators includes the University of California, Stanford University, Peter Thiel’s private foundation, Y Combinator, Bayer Healthcare, and Johnson & Johnson. Some of these programs focus on the life sciences, and some are tech accelerators expanding their reach into biotech, as we reported here about Y Combinator and StartX.

Just last week, Xconomy reported that the investment group SOS Ventures has leased space for a new synthetic biology accelerator, IndieBio, in San Francisco’s mid-Market neighborhood, which is better known for hotels, shopping, and more recently, Twitter’s new headquarters.

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Qualcomm and Techstars Establish Accelerator for Robotics Startups

Wed, 10/15/2014 - 16:35
Bruce V. Bigelow

As the global market tops out for advanced smartphone processors, radios, and other wireless chips, Qualcomm (NASDAQ: QCOM is staking a claim in robotics.

Under a partnership with Boulder, CO-based Techstars announced today, the wireless technology giant plans to host a four-month robotics accelerator for 10 startups at its San Diego headquarters next year. The new Qualcomm Robotics Accelerator, powered by Techstars, is intended to accelerate the development of next-generation robots and intelligent machines.

Qualcomm says it has committed over $1 million in aggregate funding to startups admitted to the program. A Qualcomm spokesman says the company has not yet named a managing director for the accelerator, which will be run with assistance and insights from Techstars.

Asked if Qualcomm technology will be used as a criterion for admitting companies to the accelerator, the spokesman responds in an e-mail: “The program is open to anyone and everyone in the robotics space regardless of the technology they use. The only criteria [are] that the companies have great teams with strong, thoughtful ideas, and the ability to execute. They also need to be focused on building the next generation of robotics and smart machines.”

Along with Silicon Valley’s Y Combinator, Techstars has emerged as one of the nation’s most successful programs for mentoring and investing in seed-stage tech startups. The accelerator was founded in 2006 by software entrepreneur David Cohen, who remains Techstars CEO, and Brad Feld, who is a managing director of the Boulder-based venture firm Foundry Group.

After enrolling its … Next Page »

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Ensighten Buys Anametrix Amid Consolidation in Digital Marketing

Wed, 10/15/2014 - 10:00
Bruce V. Bigelow

San Jose, CA-based Ensighten, which provides Web-based tag management technology for corporate customers, says today it has acquired Anametrix, a San Diego specialist in software-as-a-service used to analyze and optimize multi-channel digital marketing.

It is Ensighten’s second acquisition this year, and extends a wave of consolidation that has been underway for more than a year among digital media and marketing companies.

In an interview yesterday, Ensighten founder and CEO Josh Manion declined to disclose terms of the deal.

A source familiar with the buyout, however, describes it as a cash-and-stock deal in which the valuation ultimately depends on how well Ensighten does from here.

Josh Manion

Manion founded the company in Cupertino in 2009, moved it to San Jose in 2012, and says Ensighten now has about 230 employees. The company has raised at least $55 million from investors, according to Crunchbase, and my source says Ensighten’s year-over-year revenue growth is 150 percent.

Anametrix has raised about $7 million from investors since WebSideStory founder Blaise Barrelet started the company in 2010 with funding through his Analytics Ventures fund. Other investors include the San Diego private equity firm TVC Capital, which invested $4.4 million in late 2012, Airtek Capital Group, WMAS Management, Alain Schreiber; and former Summit Partners managing director Walter Kortschak.

Anametrix has about 35 employees at its San Diego headquarters. Manion says he not only plans to keep those operations in San Diego, but expand by “aggressively recruiting.”

The Anametrix deal follows the Dentsu Aegis Network’s acquisition last month of San Diego-based Covario and its … Next Page »

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Venture Firms Turn Down Funding Volume, but Still Rockin’ in Q3

Tue, 10/14/2014 - 08:00
Bruce V. Bigelow

Venture capital activity descended from the stratosphere during the third quarter, but it was still flying high, as venture firms invested nearly $9.8 billion in 879 deals across the United States, according to a report released today by the financial data firm CB Insights.

The amount invested during the quarter was down 30 percent from the $13.9 billion that VCs deployed in the previous quarter, and the deal count was down by 10 percent from the 974 deals that CB Insights counted in the second quarter. But it still marked the third consecutive quarter when VC funding exceeded $9 billion, according to the report.

The accumulated total for VC funding so far this year amounts to more than $33.7 billion—a 59 percent leap from the $21.9 billion deployed during the first three quarters of 2013. As we previously reported, mega venture investments in Airbnb, Uber, and Pinterest helped drive second-quarter VC funding to a 13-year high.

With its quick snapshot of quarterly VC activity, CB Insights is usually first to release its data, which counts only venture capital investments (including corporate venture) in emerging companies. The quarterly MoneyTree Report, which provides a more detailed survey of third-quarter venture capital activity, is set for release later this week.

U.S. venture activity (courtesy CB Insights)

In its 114-page report, CB Insights notes that venture funding for startups increased in New York to a five-quarter high, with close to $1.4 billion invested in 122 deals.

An astounding 85 percent of New York’s venture dollars went … Next Page »

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Untying the Knots in Big Data and Big Biology: Q&A with Andrew Su

Mon, 10/13/2014 - 15:15
Bruce V. Bigelow

As big data becomes increasingly important in using genomic information, the National Institutes of Health is funding a sweeping initiative to help untie the knots that make it hard to extract and apply meaningful information from huge biomedical data sets.

The program was conceived, in the words of NIH Director Francis Collins, to “overcome the obstacles to maximizing the utility of the mammoth data sets that are emerging at an accelerated pace.” The funding is intended to develop innovative approaches, software, computational tools, and other resources needed to pull meaningful information from massive data sets on everything from genomics to patients’ medical records.

In San Diego, The Scripps Research Institute (TSRI) and Scripps Translational Science Institute will get about $4.4 million in NIH funding announced last week that is intended to help researchers find new ways to analyze and use increasingly complex biomedical data. The institutes are part of a newly formed consortium designated to receive a total of $11 million to establish a new UCLA Center of Excellence for Big Data Computing. The center’s director is Peipei Ping, a UCLA professor of medicine and physiology whose research is currently focused on understanding proteome biology in cardiovascular medicine. Proteomics refers to the study of proteins.

Andrew Su

“We will be developing a variety of technologies for proteomics,” says Andrew Su, a TSRI associate professor who is a co-director of the new center. In an e-mail exchange over the weekend, Su said new techniques are needed for researchers to better identify post-translational modifications in proteins and to correlate changes to genetic variants. (My Q&A with Su is below.)

The new center also will tap into the Scripps Wellderly Genome Resource, a DNA data set that currently has genomic information on more than 1,300 people who have lived at least 80 years without developing any chronic disease. Among other things, researchers at the Scripps Translational Science Institute and Scripps Health are compiling the data to provide a master reference of what a healthy human genome looks like.

NIH is making an initial investment of nearly $32 million in fiscal 2014 to establish 11 similar “centers of excellence” throughout the United States. They include new centers at the University of Wisconsin-Madison; Stanford University; UC Santa Cruz, Harvard Medical School, and the University of Southern California.

The agency also provided funding for a 12th program, called ENIGMA, focused on human brain diseases that is collecting … Next Page »

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How Much Should I Work?

Mon, 10/13/2014 - 01:01
Joe Chung

My son, a member of the optimization generation, where pretty much every aspect of his life will be tracked, measured, and ultimately ruled by the Alg, posed a fascinating question to me the other day. He simply asked, “How much should I work?”

Now, the context for the question is that he’s undoubtedly a Type A who throws himself into his pursuits with unbelievable intensity, but his job is somewhat loosely structured so that he has a huge amount of discretion over how he allocates his hours and in particular how many hours he works at all. (Hint: he works a LOT.)

So I traced an approximation of the following graph on a restaurant table top:

The X-axis is the average number of hours per day spent working. Zero is of course zero, and 24 means that he would be literally working 24 hours every day, 7 days per week without sleeping! The Y-axis is job productivity measured in percentage of one’s possible potential. So 100 percent is the best one can possibly be.

So obviously if he works zero hours he will achieve exactly zero percent of his potential productivity. On the other end of the X-axis, working continuously without sleeping will also yield zero percent (I’m not allowing negative productivity just to keep things simple), and in fact if he worked so hard that he never slept he might actually die! So in between these two extremes, the graph must surely rise to 100 and fall back down again to zero. In my hypothetical graph I start with a fairly steep rise as the average hours per day goes up, but following the law of diminishing returns, the productivity curve must flatten so that each additional hour per day yields less and less of an increase in productivity. Finally the curve can rise no further having reached 100 percent, and from there the only direction to go is down!

Now at this point, which happens to be around 12 hours per day on my made-up graph (i.e., equating to 84 hours per week), my son is working so hard that spending more time at work actually begins to decrease productivity due to making errors, losing track of things, miscommunications, etc. Once he increases his hours to the point of seriously cutting into sleep, meals, hygiene, and other normal bodily functions, his productivity plummets as errors pile up, e-mails are left unanswered, and important meetings are forgotten in a delirious haze of ill temper and body odor.

But the important takeaway from staring at the curve is that for every level of productivity, except 100 percent, there are actually two levels of work hours that correspond. So at the point at which he is averaging 18 work hours per day yielding a productivity of about 25 percent, at least according to my particular graph, he could also work just 3 hours per day and achieve the same productivity and presumably be a much more pleasant person to share an elevator with. Which brings us to an obvious truth: No matter what level of productivity you are achieving, you are much better off being on the left side of the curve than on the right!

What’s interesting about this line of thinking is that I strongly suspect that the vast majority of driven, hard-working Type A’s are always on the wrong side. Their personalities lead them to push themselves as hard as they can until something (e.g., partner, close friend, nervous breakdown), actually pushes back. If that’s true, then they basically push themselves until they are well past their optimum output and down the declining right side of the hump until something is actually breaking, whereas they could achieve the same level of productivity by working several fewer hours per day.

So to finally answer my son’s question, here are a few simple rules:

1. At the very least, try not to be too far down the right side of the curve. Recognize the signs of declining productivity by seeking out feedback from the people you work for and work with. When they say you’re working too hard, you probably are.

2. Notice how your allocation of non-working hours affects your overall job performance. If your job requires that you be creative, personable, inspiring, etc., you’re probably not going to be those things for long if you are working yourself to death.

3. Experiment. Like any good data-driven analytical optimization, you need to create a varied set of data points from which you can draw comparisons. Try different levels of work and attempt to infer your personal productivity graph, decide where you want to be, and try to be on the left side of the graph. It won’t be perfect, and of course one can’t really measure productivity on a single axis, but it’s probably better than just going pedal to the metal until you burn out!

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Doctors Close to Implanting First Stem-Cell Therapy for Diabetes

Fri, 10/10/2014 - 11:27
Bruce V. Bigelow

Researchers from San Diego-based ViaCyte and UC San Diego provided new details about the first-ever human clinical trial of a stem cell-derived therapy for patients with type 1 diabetes yesterday at a scientific symposium at The Salk Institute.

The early stage clinical trial is intended to test the safety of an approach that ViaCyte has spent over 12 years developing, according to Kevin D’Armour, ViaCyte’s chief scientific officer.

The approach, called islet replacement therapy, implants a semi-permeable packet containing human embryonic stem cells just under the skin of patients with type 1 diabetes. ViaCyte has engineered the stem cells to grow into healthy pancreatic cells that produce insulin and other hormones used to maintain normal levels of blood sugar.

UC San Diego is overseeing the first cohort of patients in the clinical trial, and a simple surgical procedure to implant ViaCyte’s packets in the first patient is scheduled for Oct. 21, according to Robert Henry, a UC San Diego professor of medicine and chief of endocrinology, metabolism, and diabetes at the VA San Diego Healthcare System. Henry said two more patients would get the implants in November and December.

“By the end of the year, we should have a significant amount of information about the first three patients in the first cohort,” Henry said in a heavily attended presentation at the 9th Annual Scientific Symposium of the “Stem Cell Meeting on the Mesa.”

The ViaCyte trial represents “the absolute leading edge of stem cell research,” said Larry Goldstein, a leading research scientist in regenerative medicine at UC San Diego and director of the university’s new Sanford Stem Cell Clinical Center. Only a handful of similar efforts in stem cell research have gotten as far as human clinical trials, Goldstein added.

Research published yesterday in the journal Cell describes a … Next Page »

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West Coast Biotech Roundup: CareFusion, Sunesis, Second Genome, Etc.

Thu, 10/09/2014 - 16:47
Alex Lash

After a week’s hiatus, the roundup is back. We’ve been busy. New Xconomy San Francisco editor Bernadette Tansey took a first look at a plan to build a local incubator for synthetic biology startups, while I covered an appearance by Tekmira Pharmaceuticals CEO Mark Murray, the first since his company’s drug was approved for emergency use in Ebola patients.

I also dived into the rapidly expanding pool of digital health products—many of which are being developed in San Francisco and Silicon Valley—to ask how much clinical evidence we (meaning patients or users), our healthcare providers, and the insurers need before adopting these apps and programs.

And in case you’ve missed it, our Seattle biotech op-ed contributor Stewart Lyman is exploring in depth his hometown’s troubles in building a sustained, thriving life-science industry. His prescription: more “semi-successful” companies. Here are parts one, two, and three.

There was plenty of other news we couldn’t cover the past seven days; that’s why we round things up. Let’s get to it.

—After last week’s market debuts of Bay Area biopharmas Dermira and Calithera Biosciences, the queue looks like it’s about to move fast again. At least four West Coast biotechs made progress toward an IPO in recent days. Atara Biotherapeutics re-filed its paperwork after pulling back in July. Virobay of Menlo Park, CA said it would aim to sell 3.8 million shares between $12 and $14 a share in its upcoming offer. Vista, CA-based diagnostics firm AutoGenomics hopes the third time’s a charm, filing for a $60 million IPO after two previous attempts fizzled. Up the coast and across the border near Vancouver, BC, Xenon Pharmaceuticals has targeted a sale of 4 million shares between $10 and $12.

—San Diego-based CareFusion (NYSE: CFN) agreed to a $12.2 billion cash-and-stock acquisition by Franklin Lakes, NJ-based medical technology maker Becton, Dickinson and Company (NYSE: BDX). BD said it would keep a presence in San Diego, where CareFusion, a maker of infusion pumps and drug-dispensing systems, has about 2,100 employees.

—Data from a Phase 3 trial of vosaroxin from South San Francisco-based Sunesis Pharmaceuticals (NASDAQ: SNSS) showed acute myeloid leukemia patients on the drug (combined with cytarabine) lived slightly longer than those only on cytarabine, but the result was not statistically significant, which was the main goal of the study. Sunesis officials said they would try for European approval based on the data, but investors bailed, sending the stock down 78 percent to $1.43 a share as of market close Wednesday.

—Second Genome of South San Francisco, CA, announced Tuesday a microbiome research collaboration with the Mayo Clinic to pursue therapeutics for up to eight disease areas, including inflammatory bowel disease, metabolic disorders, and colorectal cancer. Mayo will also make an undisclosed amount of equity investment in Second Genome.

—Six months after its IPO, San Diego’s Vital Therapies said it plans to raise about $35 million by selling 2 million shares. The 11-year-old company (NASDAQ: VTL) has developed an artificial liver support system using human liver-derived cells.

—The Allen Institute for Brain Science in Seattle announced receipt of an $8.7 million National Institutes of Health grant for the study of synapses. Stephen Smith, who came to the Allen Institute from Stanford University in August, is the lead investigator.

—Cardiac Dimensions of Kirkland, WA, has raised $8.5 million from Arboretum Ventures, also of Kirkland, adding to the $20 million round it announced in April.

—Blaze Bioscience of Seattle received a $1.5 million small-business grant to fund a Phase 1b study of its lead product, an imaging agent to identify cancer cells for more precise surgical removal, in patients with soft tissue sarcoma.

Xconomy San Diego editor Bruce V. Bigelow and Xconomy Seattle editor Ben Romano contributed to this post. Photo courtesy of “Captain” Bigelow.

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Allot Closing San Diego Operations Two Years After Ortiva Buyout

Thu, 10/09/2014 - 13:10
Bruce V. Bigelow

Israel’s Allot Communications (NASDAQ: ALLT) is shutting down its San Diego-based operations, which came with the 2012 acquisition of Ortiva Wireless, a spokeswoman confirmed today.

About 20 employees are affected by the shutdown, according to an e-mail from Maya Lustig, director of communications for Allot, which is based near Tel Aviv, in Hod Hasharon. Ortiva, which specializes in optimizing video streaming across wireless networks, had 41 employees in San Diego when the deal closed.

“Further to our continuing goal to best support and answer our business and customer needs, Allot decided to begin a process of transferring and centralizing all video knowledge regarding markets, products, and support to our headquarters in Israel,” Lustig writes in a note today. “We aim to complete this process by the end of this year and as a consequence, we are gradually closing our facility in San Diego. We believe centralizing our video capability will enable us to continue to improve the solutions, services and support we provide to our customers.”

Allot optimizes data traffic and performance over both IP and mobile broadband networks, providing its technology for service providers, carriers, and networks operated by large corporations and other organizations. Allot’s hardware platforms and software applications apply its deep packet inspection technology to turn broadband pipes into smart networks, so that other Internet services can be rapidly deployed. The technology also can be used in surveillance of individuals.

Ortiva was founded in late 2004 to advance technology from the UC San Diego lab of Sujit Dey, an electrical and computer engineering professor who also served as Ortiva’s chief technology officer. Dey did not respond to an e-mail query earlier this week.

Lustig writes, “Allot Communications views video-related solutions as a core part of its offering to its customers. As part of this view we have developed many different solutions in this area— solutions for video-caching, video-optimization, video-analytics and others. The operation and development of most of these solutions is done mainly from Allot’s headquarters in Israel, while part of the video-optimization development is done from our facility in San Diego.”

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Can Salesforce1 Push the Workforce into the Mobile Age?

Thu, 10/09/2014 - 11:33
Doug Winter

Dreamforce 2014 is quickly approaching, and it has me thinking about the impact Salesforce (NASDAQ: CRM) has had on the way we work and more generally on the future of work itself.

Dreamforce is the annual Salesforce user conference, and it has more or less become a must-attend event for anyone in the cloud computing business. Last year the conference drew more than 120,000 attendees to downtown San Francisco.

From the beginning, Salesforce has revolutionized the way we do business. They were the first pioneers to bring customer relationship management (CRM) to the cloud, and last year Forbes ranked Salesforce as the world’s most innovative company. Today, we’re finding ourselves in a time where massive trends are reshaping the enterprise and in turn, the workforce. How companies respond will dictate the rest of their future within their particular space.

Now Salesforce is driving more changes. As mobile device adoption continues to accelerate and shift everyday thinking, enterprises are starting to evolve beyond the “bring your own device” (BYOD) era and into a full-fledged, mobile-enabled workforce. In fact, according to a recent survey from CA Technologies, 60 percent of companies have an enterprise-wide mobile strategy, or are planning to implement one in the next year.

A mobile-enabled workforce can improve efficiency, productivity, and provide flexibility within the workplace. Moreover, a mobilized workforce enables faster communication, enhances customer experience, and lowers costs. When it comes to a high-profit selling environment, however, a company needs more than a laptop or smartphone—they need mobile applications that make it easier to get work done. This way, sales reps can focus on what they do best—selling.

Realizing the potential that mobile apps represent in this new era of workforce mobility, Salesforce is rolling out their Salesforce1 Customer Platform to connect business apps, devices, and data in one place. Salesforce1 allows users to take their CRM system anywhere they go. It gives sales reps direct access to their reports and dashboards, easy navigation with accounts, and provides access to data offline. This enables reps to … Next Page »

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What Seattle Needs (Part 3): Working Together to Revitalize Biotech

Wed, 10/08/2014 - 04:00
Stewart Lyman

These are incredibly exciting times in biomedical research. Though the biopharmaceutical industry is in flux, prospects for a greater understanding of the disease process, and the development of new treatments, has never been brighter. Gilead Sciences’s new hepatitis C drug sofosbuvir (Sovaldi) will actually cure most patients of their infections, and replaces treatments that were both less effective and marred by serious side effect profiles. A new combination of cancer drugs extended the lives of breast cancer patients not by weeks, but by 15.7 months compared to older treatments. Next generation sequencing technologies are enabling the rapid diagnosis of both infectious and metabolic diseases. Many rare disorders, which in years past might never have been accurately diagnosed, have given up the secrets encoded in their DNA.

In the case of cancer, many different tumor types have been sequenced and their molecular defects identified. These data will point the way towards treatments that are focused on these particular biomolecules. Not all of the genetic information will direct how the patients will be treated, but the knowledge gained may enable future therapies, or spare patients from existing modalities that won’t work. A new drug was just approved for treating melanoma, the sixth one granted by the FDA since 2011 to treat this deadly disease. Advances in cellular repair therapies like CRISPR may one day make it possible to correct genetic defects in cells, allowing for the treatment of literally hundreds, if not thousands, of monogenic diseases (those caused by a mutation in only a single gene), such as Duchenne muscular dystrophy and cystic fibrosis. And stem cells are being tested in thousands of different clinical trials for a wide variety of disorders.

Here in Seattle bright rays of light are penetrating the gloomy cycles of repeated layoffs. Adaptive Biotechnologies raised $105 million in April, and Novo Nordisk is offsetting the dissolution of their Seattle inflammation group by establishing a new obesity research team in Seattle. The most brilliant arc to shine through the region lately was the launch of cancer immunotherapy company Juno Therapeutics. Founded out of technologies coming from New York’s Memorial Sloan-Kettering Cancer Center, the Fred Hutchinson Cancer Research Center, and Seattle Children’s Research Institute, the company has raised an astounding amount of capital ($310 million) in its first year. The sum reflects the enthusiasm that many venture capitalists and institutional investors have for this approach. As a bonus, Juno has been able to hire local biotech veterans from immunology-focused companies including Immunex, Dendreon, and Xcyte Therapies. More good news: Celgene has committed to establishing an “Immuno-Oncology Center of Excellence” in Seattle, although details of its plan have not been made public.

Juno, though, is not your typical biotech company. Most biotechs don’t have the luxury of raising money after their technologies have already been at least partially validated by small-scale clinical trials. Even if Juno’s treatment regimens can be successfully expanded at scale, the cost associated with them is going to be uber-expensive for payers. That, in turn, is going to attract the attention of those Big Pharma companies who need to fill patent-expiration holes in their revenue streams (which in any given year is most of them). Then we’ll be left with the million-dollar question of whether a future acquirer wants to expand its presence here, or if it’ll be more layoffs as part of “The Never Ending Consolidation Story.”

The Bigger Picture: Biomedicine Faces Challenges In Multiple Areas

The loss of biopharma jobs is a significant concern here in Seattle. However, jobs are just one of the issues facing the biomedical industrial complex. Declines in pharmaceutical research productivity and the challenge of drug affordability continue to be vexing problems with no easy solutions. Funding for government sponsored biomedical science has endured serious cuts in recent years, especially for those supported by the National Institutes of Health. It’s driving many scientists to retire or change jobs. A recent paper, “Rescuing US biomedical research from its systemic flaws,” written by some of our nation’s most prominent research scientists, points to the need for fundamental changes within this system. They declare that the status quo is unsustainable. Whenever you hear about the need for science, technology, engineering, and mathematics (STEM) jobs, keep in mind that not all of these positions are created equally. While there is a strong need for more engineers, it appears that there are not enough jobs out there to employ the current crop of biologists as well as those presently earning their PhDs in this field. I’ve given career development talks at a number of area academic institutions in the past year, and I can tell you that many of the graduate students and postdocs are very concerned about their future job prospects.

If we’re going to talk about completely remaking our biomedical enterprise in the U.S., then we should also engage in some serious conversations as to whether or not our current system for coming up with new drugs is the best that we can imagine. Maybe it’s time to think about new ways of funding biomedical science. There are some non-profit organizations that work on drug development, and this model should be given a closer look. Roger Stein and his colleagues at MIT have suggested a new model for funding drug development by financing bonds to pay for it. While I’m not an economist, I like the approach because it illustrates creative thinking and it could work out financially. For those of you who haven’t been paying attention to drug costs, paying for new medicines, especially in oncology, is becoming increasingly problematic. It’s one thing to pay a lot for a curative drug that can save your life (e.g. Gilead’s hepatitis C drug sofosbuvir, priced at $84,000 in the U.S.), but some of the most expensive drugs in oncology only extend most patients lives by a few weeks.. These high costs led cancer doctors at Sloan-Kettering to write an editorial explaining why they were not going to prescribe a new drug called ziv-aflibercept (Zaltrap): its high cost outweighed its benefits. This resistance persuaded Sanofi, the developer of the new medicine, to cut the price in half.

Are Our Efforts to Encourage Biotech Growth Competitive With Other States?

As Seattle Seahawks quarterback Russell Wilson likes to point out, if you want to achieve success, “the separation is in the preparation.” A number of other states appear to be doing a better job of investing in their biomedical futures than we are. California launched its $3 billion stem cell initiative in 2004, an enormous commitment at the time. The University of California system just announced that it’s making a $250 million investment in venture funding to back the ideas of researchers at its member institutions. Massachusetts launched a $1 billion initiative (a mix of loans, grants, and tax credits) in 2008 to boost its biotechnology industry, although it was later scaled back as a result of the financial crisis. I’m sure that supporters and detractors will argue over the exact benefits of these investments for years, but what’s not debatable is that these two states are the industry leaders in biotechnology.

They’re also not alone in promoting biotechnology. New York City launched a bioscience initiative in 2011 as a public-private partnership, and followed that up in 2013 with a $100 million investment in early-stage life science companies. It also helped recruit Seattle’s Accelerator to establish a branch in Manhattan that will fund local startups.

Here in Washington state, we’re a bit more cautious. Ten years ago a plan, Bio21, was put together to … Next Page »

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So Far, Little Proof That Digital Health Is Healthy. Does It Matter?

Tue, 10/07/2014 - 13:53
Alex Lash

Digital health is popular among investors, there’s no doubt. But is it good for us?

Products such as fitness wristbands and online wellness coaching are generating buzz, and as a techno-skeptic I often roll my eyes at the trendy accessories and general assumption that life is easier online. Meanwhile, the funding keeps rolling in. Through three quarters of 2014 the nascent field has attracted $3 billion, already double the 2013 total, according to Rock Health, the San Francisco digital-health incubator, seed investor, and data provider. (Rock Health is no neutral analyst, but one close observer of the sector says the incubator’s funding totals are actually on the conservative side.)

So I decided to look for examples of high-tech products, from wireless devices to smartphone apps to online programs, that are already proving—in the eyes of the medical community, not just the marketing community—they make people healthier. That, of course, requires evidence.

The short answer is, there isn’t much. Steven Steinhubl is the director of digital medicine at the Scripps Institute of Translational Medicine in San Diego, and he’s on the lookout for technology and products that his group can put through clinical trials. “I believe mobile health technology is the future of medicine and can play a critical role improving health outcomes, boosting patient convenience and health provider satisfaction,” says Steinhubl. “But we have to demonstrate it. The vast majority of supporting data is in the form of pilot studies.”

When asked to define “pilot studies,” he says: “Dirty first looks.”

Steven Steinhubl (Photo courtesy of Scripps.)

When I asked Rock Health managing director Malay Gandhi about the importance of rigorous clinical studies for up-and-coming digital health companies, he replied, in part, “I would never generalize to the entire category. I think that’s dismissive. While I think it is critical for everyone in healthcare to prove what they’re doing actually works, getting into a strength-of-evidence argument at this point seems slightly misguided. I’m not in support of delaying access to massive improvements over the status quo while we wait for the perfect study to satisfy academic criteria.”

It’s at heart a Silicon Valley attitude: users first. If it looks like a “massive improvement over the status quo,” get it out there.

But many in the field know they have to show real benefits; some have, and for others there hasn’t been time to gather significant samples of data. With the funding explosion this year, more fledging companies doing serious studies should be publishing peer-reviewed data in the next few years.

In the meantime, can those first looks be enough in some cases to convince doctors, nurses, hospitals, patients and insurers to trust, pay for, and put those products into practice? The field has plenty of applications that shouldn’t require the same body of evidence as, say, a device implanted in a patient or a new pharmaceutical product.

Joseph Kvedar, a dermatologist and director of Partners Healthcare’s Center for Connected Health in Boston, says the field needs to find “a happy medium.” He’s worried about the tech startup mentality—”stay lean, pivot when it doesn’t work, and assume when people adopt it it’ll be right.”

“But I don’t necessarily believe a five-year trial is always the right answer, either,” he says.

One good example of that happy medium comes from Steinhubl’s group at Scripps, which tested a band-aid-sized wireless patch called Zio developed by San Francisco-based iRhythm Technologies. Adhered to people’s chests, the patch detected about 50 percent more irregular heartbeats, or arrhythmias, than the more cumbersome standard detector, called The Holter, which patients don’t like wearing for more than a day or two. The National Institutes of Health paid for the 146-person study, and in a January blog post, NIH director Francis Collins held it up as an early example of a significant clinical outcome in mobile health. “Pretty amazing stuff,” he wrote. (You can see pictures of the two devices on the blog, too.)

Based on those results, Aetna added the Zio patch, which is water-resistant and can stay on a patient’s chest for two weeks, to its reimbursement policy. That’s because detection of arrhythmias isn’t easy, so the longer a person with suspected heart problems can wear a monitor, the better. And detection of arrhythmia is a good way to prevent serious complications, including stroke.

I talked to another entrant in the heart monitor business. San Francisco-based AliveCor has an app that turns a smartphone into a handheld electrocardiogram, meant for people with arrhythmia history or at risk for heart disease to use on their own or at a doctor’s office. If feeling symptoms like shortness of breath, a person launches the app and touches fingertips to the electrodes on the customized phone case to find out if he or she is undergoing atrial fibrillation, the type of arrhythmia most linked to stroke.

The FDA has cleared its use without a prescription to automatically interpret an irregular heartbeat as A-fib. The readout says, in part, “Possible AF detected. This result is not a diagnosis.”

But there’s no proof it makes patients healthier. To gain FDA clearance, “we didn’t have to show … Next Page »

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What Seattle Needs (Part 2): Dealing With Amgen’s Upcoming Departure

Tue, 10/07/2014 - 04:00
Stewart Lyman

Reality bites: Amgen’s (NASDAQ: AMGN) decision to leave Washington state is a serious blow to our local bioscience ecosystem. Those who think that all of those people who got laid off (or choose not to relocate) will be able to find biopharma jobs here in Seattle are kidding themselves. Our community is not large and robust enough that the employees of large companies being acquired or shut down can readily find local re-employment in the biotech arena.

And what about the research these employees were conducting? Budget cuts often have strong negative impacts on research productivity. One day you’re working on an exciting project to develop a new medicine, and the next day the company is closing down your location and your fate is up in the air. This is more than a personal tragedy. Your project may be abandoned for any number of reasons and wind up in a scientific black hole from which escape is quite difficult. Even if you have the entrepreneurial inclination to start a new company by licensing the intellectual property associated with your old project, there’s no guarantee that your former employer will go along with your idea. Think how embarrassed the company might be if you succeeded! Your success could lead to a strong rebuke of the company’s senior management, and to avoid this potential problem, it may simply put your project on the shelf “for future consideration.” The company also avoids the issue of having its “deep pockets” sued if some problems arise in the clinic with a drug it licensed out.

Big Pharma Decisions Are Often Tied to Short Term Economic Considerations

Biopharma companies have some economic advantages that few other industries share. Most notable, of course, is monopoly pricing that is not tied to the cost of goods, but to the perceived benefit they bring. Having said that, those that are publicly traded companies must answer to their shareholders. This leads most of them to take a short-term economic view, and when they change plans it can be devastating to a community. In 2005, the U.S. Supreme Court ruled in a widely criticized decision (Kelo vs. City of New London) that private property could legally be taken by government and turned over to private developers to boost the local economy. In this particular case, developers wanted the land to build amenities (shops, a hotel, condos) to support new laboratory facilities to be built in New London, CT, by Pfizer. Families were evicted, houses were bulldozed, the land was cleared, and then Pfizer decided not to build labs there after all. The area, which used to be a middle class neighborhood, deteriorated and became a dumping ground. The city would have been much better off if Pfizer had never suggested building its labs there.

Amgen announced plans in 2006 to build out the rest of the Seattle Helix campus; this would have potentially doubled the number of employees at the site. Sadly, those plans were abandoned several years later at the start of the great recession in 2008. These examples illustrate that even Big Pharma’s Big Plans can change in a hurry.

Former Immunex employees may have noted the irony in Amgen’s  second quarter earnings report that accompanied the news that its Washington state locations were being shut down. Marketed products acquired from Immunex when it was purchased (etanercept, sold as Enbrel) as well as products in the pipeline that were developed at least partly by Immunex employees (panitumumab (Vectibix) and denosumab (Prolia/Xgeva)) contributed a whopping 39 percent of product sales. These drugs also showed some of the largest year over year sales gains: Enbrel was up 7 percent, Vectibix 42 percent, and Prolia/Xgeva 29 percent, while sales for legacy Amgen products Neulasta/Neupogen were down 1 percent and Aranesp/Epogen sales were essentially flat.

What Will Become of the Helix Campus?

The issue of what will happen to the Amgen campus also remains up in the air. A number of suggestions have been put forward, including making it the site of a new university (e.g. the Washington Institute of Technology). Amazon could reconfigure the space as a stealth lab where Jeff Bezos and company can work on their skunk work projects. Novo Nordisk has just announced that it is going to assemble a new obesity group. The Helix site would … Next Page »

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Taking a Hachette to Amazon in the Market for Dead Trees

Mon, 10/06/2014 - 04:41
Eliot Peper

There’s a strange battle going on right now. Weird enough to fit into the science fiction and fantasy section of your local bookstore, but with enough intrigue to make for a good thriller.

One of the big five traditional New York publishing houses, Hachette, is mired in a guerrilla campaign against mega online retailer Amazon. The conflict revolves around the terms on which Amazon sells Hachette books. Much has been written about the labyrinthine details. It boils down to a pissing match over issues that are neither new nor unusual in the wonderland of publishing.

As a new novelist ducking and rolling through the crossfire, the blows and counterblows playing out in the court of public opinion aren’t the interesting part. The backstory is.

Remember David’s fight with Goliath? That’s how Hachette is trying to frame the skirmish. They paint themselves as the underdog fighting the big online bad guy. Their PR campaign has been relentless, though often contradictory. They’ve even recruited The Authors Guild and Authors United to their side, and last week, such literary lions as Phillip Roth, Ursula K. Le Guin, Salman Rushdie, and Milan Kundera joined the fray. Can the old guard of the traditional publishing world and the small cadre of authors that they benefit defeat the evil Amazon monopoly?

Sounds like a good story, right?

The problem is that the narrative is all wrong. They must have a master PR manipulator on the case because even The New York Times has run a number of stories that are appalling in their partisanship (maybe it helps that Authors United purchased a $104k full page anti-Amazon ad).

So what’s really going on? It’s not David versus Goliath. It’s Goliath versus Goliath. Hachette is owned by a massive international media conglomerate. They have spent decades gobbling up smaller publishing houses in ruthless competition with the other members of the New York big five. Hell, the Department of Justice sued Hachette, Apple, and other large publishers for collusion in 2010. The contract terms they offer to authors are famously draconian, packed with non-compete clauses, unfair royalty splits (on average, 15/85 in favor of the publisher), ridiculous reversion rights, etc.

The big five publishers used to be the gatekeepers separating writers from readers. They controlled all the major distribution channels and could dictate any rules of the road they wanted. New authors had no choice but to comply.

Technology has changed all that. The Internet has democratized publishing and anyone can now publish their own book in both digital and physical formats. That terrifies slow-moving conglomerates like Hachette because their entire business model is outdated and ripe for disruption. They’re scared out of their minds that they will go the way of the typewriter and the buggy whip.

The members of Authors United happen to be the writers who have benefited most from that outdated model. They are the top 1 percent of incumbent allies. It’s just like taxi cartels fighting Uber and Lyft. Those whose wealth came from the old system have the most to lose as that system inevitably changes.

Don’t get me wrong, I’m no Amazon fan boy. Everything I hear supports the popular view that their internal corporate culture is a grinding machine; that they want to increase their market share at all costs; and that they will stop at nothing to dominate and reshape every industry they touch.

But I’m an author myself, so this whole situation matters to me. A lot. So where did I turn in this arm-wrestling match between titans?

I published with a new independent publisher, FG Press, founded by the Boulder, CO-based Foundry Group. They split net royalties 50/50 and their entire business model is based on being author-friendly. But they’re not the only ones. Authors like Hugh Howey, Joanna Penn, William Hertling, James Altucher, and JA Konrath have self-published and achieved extreme success. Big names like Barry Eisler have broken their contracts with traditional publishers to go independent. Reedsy, a UK-based startup, is building a new marketplace for authors to find the editorial and production help they need. New publishing houses are experimenting with a kaleidoscope of new approaches and technologies. Authors are embracing entrepreneurship.

There has never been a better time to be a writer. Let Hachette duke it out with Amazon. Let the top 1 percent of traditionally published authors complain ad nauseam. Let The New York Times wallow in its embarrassing reporting of the story. In the meantime, adult Americans are reading more than they ever have in history. New voices are finding traction in a marketplace no longer constrained by stingy gatekeepers. Storytelling is a part of being human. So go write that damn book you’ve always dreamed of.

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